Trying to Understand Apple's Automotive Efforts

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TL;DR: It’s confusing.

Mark Gurman and Alex Webb for Bloomberg Technology:

Apple Inc. has drastically scaled back its automotive ambitions, leading to hundreds of job cuts and a new direction that, for now, no longer includes building its own car, according to people familiar with the project.

Hundreds of members of the car team, which comprises about 1,000 people, have been reassigned, let go, or have left of their own volition in recent months, the people said, asking not to be identified because the moves aren’t public.

New leadership of the initiative, known internally as Project Titan, has re-focused on developing an autonomous driving system that gives Apple flexibility to either partner with existing carmakers, or return to designing its own vehicle in the future, the people also said. Apple has kept staff numbers in the team steady by hiring people to help with the new focus, according to another person.

It’s so confusing to follow Project Titan, which is why I almost never talk about it on here despite me being bullish on the future of cars.

Just as confusing to me is the idea of a completely Apple-designed, Apple-branded car. Even in a very basic sense, it just seems silly to see a car with the Apple logo on it, particularly alongside German brands that have been established for a near-century. I’m not saying the market isn’t there, it’s just that there aren’t enough indicators of Apple being a viable competitor apart from their past successes. Extrapolating based on the little we know about Apple directly relevant to their viability for success in the car industry is oversimplifying how difficult it is to enter this industry.

I was still expecting Apple to pull through with something like this, though, given how entrenched they already are in developing whatever it is they’re developing. I mean, they’re Apple, right? They have all the money and expertise in the world, surely they could pull it off? Well, let’s face the facts…

What are they building in there?

Gurman and Webb again:

“For a quality Apple-branded car they could probably get a healthy margin,” said Eric Paul Dennis, an analyst at the Center for Automotive Research. “They probably weren’t willing to compromise on quality issues” because that could hurt the perception of its other products, he added.

Apple started Titan in 2014 with grand ambitions to make a dent in an auto industry that consultant McKinsey & Co. estimates will be worth $6.7 trillion by 2030. The iPhone maker embarked upon an aggressive hiring spree, and an Apple-designed vehicle was targeted by the early 2020s. The hope was to revolutionize cars in the way the iPhone upended the mobile industry in 2007.

As with any new product category their pursue, there are lots of forces working against an Apple car becoming a reality. But I’m of the opinion that in this case, it’s at the point of becoming overwhelming.

There’s their uncompromising stance on quality, there’s their lack of expertise and experience in manufacturing a premium car at the scale they want (which is probably an order of magnitude larger than the entire luxury car industry combined, at least in the really long term if the iPhone is anything to go by), and there’s the opportunity cost of not being able to collect real data and feedback with each year they aren’t in the market, among others I’m probably missing.

And suppose that a car is not in the works. What else can they make that’s primarily product-based? (I’m assuming Apple’s approach is to continue using their current business model, which is why I’ve crossed out the self-driving platform suggested by Gurman and Webb as a possibility.) A smart battery for electric vehicles? A tracker? A dashboard console? Maybe. Maybe it’s something that I can’t even conceive of yet. But on top of that, Apple’s most probably going to want control over the entire user-experience – over the hardware, software, and services. 

That in itself is an already immense thing to achieve, given that they want to have some level of control over the cars they’ll install their product onto, which would likely require deals with car makers, making those deals nearly unavoidable. And assuming that some of the deals they want to establish won’t come to fruition, whatever Apple’s working on would have a slower roll-out and (again, maybe) provide a fragmented experience across different car models/brands depending on the terms of the deals they’re able to make. (That said, I recognize that Apple has a lot of power in the negotiations they make with other companies in general. I’m just talking about the odd cases wherein they may not be able to have their way, especially if cultural differences with car brands become an issue.)

And even after all that, I think that’s aiming low. This is Apple we’re talking about, and it would be disappointing to learn by 2020 that a tracker is all they’ll have to show for Project Titan.

Or, I could be looking at it all wrong. Maybe CarPlay is the seed that’ll eventually grow into something that people (and car makers alike) will really want to have in the car. At least there are already deals established pertaining to CarPlay, right? Yeah, but what that does is stress a ton more importance on Siri for Apple, as I’m assuming voice will be the main interface with CarPlay in the future. (Unless AR is somewhere in the long-term pipeline. What exists now – a subpar touch-based interface on a subpar console – is tragic.) Going by the rate of improvement for Siri thus far, can it be a good enough primary interface by 2020? I don’t know for sure, but I really don’t think so.

Like I said, it’s confusing to try and make sense of Apple’s automotive efforts, and I really can’t blame them if they pull the plug on it tomorrow – it’s a loss they can take. It’s now just a question of whether or not its a loss they’re willing to take... I think there’s a reason why we don’t hear much about Apple’s pursuits hitting dead ends. (Well, besides TV for the most part.)